3 Reasons Why Postnuptial Agreements Are On The Rise
Interesting trends develop periodically in the field of matrimonial law, and one such current trend is the increasing popularity of postnuptial agreements. “Postnups” are the not-so-distant cousin of the more well-known prenuptial agreements, and we have seen an increasing number of Pennsylvania couples choosing to enter into a postnup.
One of the reasons driving this increase relates to the difficulties that can be presented by a prenuptial agreement. With the wedding on the horizon, many future spouses are very reluctant to raise the topic of a prenuptial / antenuptial agreement with their future bride or groom. In my experience, these discussions seem to be a bit easier to hold post-marriage, particularly if they occur a number of years after the couple’s marriage.
So if they’re already married, why do people enter into postnuptial agreements? There are a number of reasons.
One of the most common reasons a couple will seek out a postnuptial agreement is to formalize a financial commitment by a spouse who has committed some form of marital misconduct, most commonly an extramarital affair. For example, if the husband strays from the marriage, the wife may well say “I will stay in the marriage, but it will cost you.” The antenuptial agreement will then detail the additional financial protection that the husband commits to giving the wife.
Part and parcel of this situation is the somewhat philosophical concept of whether such agreements serve to punish the “bad spouse” or reward the “good spouse” for continued commitment to a marriage that has been dealt a hefty blow. In one recent case in which I was involved, the postnuptial agreement was drafted after the husband was caught having a torrid affair. The sole purpose of the postnup that I drafted was to invalidate a prenuptial agreement that had been entered into by the parties prior to the marriage. That prenup protected millions of dollars of the husband’s assets from the wife’s equitable distribution claim in the event of a divorce. Those protections were completely eliminated by the postnup, which destroyed the prenup, as a result of the affair.
Another reason to utilize postnuptial agreements is in the case of a closely held business such as a family business. The concern relates to one spouse’s claim against the owner spouse’s share in a business in the case of equitable distribution in the event of a divorce. I recently was involved in the negotiation of a postnuptial agreement where the “older generation” was willing to give the children of the next generation primary ownership of a lucrative business only if each of the spouses of the younger generation “signed off” on the value of the business, income generated thereby and related future increases as to the value of the business. In my recent case, an antenuptial agreement would not have been a possibility as two of the older generation’s children were married before business succession plans were solidified.